2025 Nanny Tax Update: Thresholds for Household Employers

The Household Employer Threshold: $2,800

The 2025 nanny tax threshold was $2,800, up from $2,700 in 2024. If you paid a single household worker $2,800 or more in cash wages during 2025, you were responsible for withholding and paying Social Security and Medicare taxes (FICA).

The combined FICA rate is 15.3%, split evenly between employer and employee at 7.65% each.

Anyone paying a household employee more than about $54 per week crossed this threshold during the year.

FUTA Threshold: $1,000 Per Quarter

If you paid $1,000 or more in total cash wages to all household employees during any single calendar quarter in 2025, you also owed federal unemployment tax (FUTA). FUTA is paid entirely by the employer at 6% on the first $7,000 of each employee's wages, with the standard state credit reducing the effective rate to 0.6%.

Social Security Wage Base: $176,100

The Social Security wage base for 2025 was $176,100 (up from $168,600 in 2024). This is the maximum amount of an employee's earnings subject to the 6.2% Social Security tax. Most household employees earn well below this cap, but it matters for high-earning household staff.

Child and Dependent Care Tax Credit

For 2025, the Child and Dependent Care Tax Credit allowed families to claim up to $3,000 in eligible expenses for one dependent or $6,000 for two or more. The credit rate ranged from 20% to 35% of those expenses depending on income.

That meant the maximum credit was $600 to $1,050 for one dependent, or $1,200 to $2,100 for two or more — depending on the family's income tier.

Dependent Care FSA: $5,000 Limit

If your employer offered a Dependent Care Flexible Spending Account in 2025, you could set aside up to $5,000 per year in pre-tax dollars to pay for childcare expenses ($2,500 if married filing separately). This is separate from the tax credit above, though you cannot double-dip on the same expenses.

2025 Quick Reference